Property scams: How to spot and avoid them


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JIMMY MOYAHA: Now I’m sticking…with the topic of property and housing, [but] with a slight shift. We’re looking at property scams. South Africa and other countries around the world are filled with all sorts of nefarious activities and scams that will really baffle you, and property scams are no different. They’ve got their own little intricacies and little kinks.

We’re joined on the line by Jackie Smith, the head of the Buyers Trust organisation, a division of ooba, and they are looking at the property scams that are relevant in South Africa, what the most common property scams are, and how to avoid them.

Good evening, Jackie. Thanks very much for your time. Do you want to take us through property scams? What are the most common scams that we’ve seen?

JACKIE SMITH: Oh, there are lots, Jimmy, but let’s narrow it down to maybe about five of them that we’ve now noticed are the most prevalent. This is stuff like fake rental listings being done by fake agents – and we can expand a bit on that.

What is key at the moment is the phishing scams, where emails are being intercepted between a buyer and a seller, or maybe a buyer and an attorney.

Then you’re looking at things like the government housing-assistance scams, where more of the underprivileged people are being scammed out of money in the low-income market.

And then also identity-theft scams. And then what we’ve seen pop [up] again are things like timeshare scams, Jimmy.

JIMMY MOYAHA: I think the timeshare one is probably the best known and the most popular one, given how long we’ve had timeshare scams in South Africa, in particular. But what are the red flags, Jackie? What should we be looking out for? For example, someone [may be] saying you need to put down some money to go and view a property. Surely we shouldn’t be falling for those sorts of scams? What are the typical techniques we see that we should consider red flags?

JACKIE SMITH: As a potential home buyer you need to be exceptionally vigilant. Make sure that you know whom you are dealing with. Phone their office again, and double check whether this person is valid. Do they even have a website? Have they got offices? Make sure that you do not pay any money in cash.

You don’t have to pay money to go and view a property. The minute somebody asks you to pay for an application form or something, just be alert, be vigilant, and say: ‘No, why?’

Question why you need to pay this money. And use reputable companies. Don’t just pay your deposit or something into anybody’s account. Make sure that you are aware of whom you’re dealing with, and that they are a legitimate business or concern.

JIMMY MOYAHA: Absolutely. And you mentioned something along the lines of verifying the individuals that you work with. How does one verify agents? Is there a place where agents are registered? Can agents be verified through the Estate Agency Affairs Board, for example? How does one validate the authenticity of the agent? But also how do you validate the authenticity of the attorney handling the money in the event of a purchase, for example?

JACKIE SMITH: Yes, you are hundred percent right. You can contact the Estate Agency Affairs Board and just double check that you are dealing with a legitimate estate agent; that should ultimately give you an answer. When you’re dealing with an attorneys firm, the same could be done through the Provincial Law Society to just double check that this is a valid attorney firm.

But when you’re buying a property most times you are asked to pay money into the attorney’s trust account. I would, as a potential buyer, be very vigilant when it comes to that.

Make sure that you are not communicating via email. Make sure that every communication is done on an encrypted environment, where no one can sort of intercept what’s being communicated to you.

JIMMY MOYAHA: Absolutely. Just on that attorney’s side of it, we know that ENSafrica was fined about R5.5 million recently for their trust account being used as part of a phishing scam. So clearly there are loopholes that are being exploited. And, as you mentioned, we should at all times exercise safety measures to engage in these transactions before we purchase the house, or before we sign any lease agreements for any rentals we might be going through.

Are there some reliable websites we should be using and websites we should be sort of staying away from when looking at property? … Are there some that we should not be engaging with at all?

JACKIE SMITH: Look, I wouldn’t say, for instance, you can’t be engaging with Property 24. These sites have sort of taken over the property market now. There are no more property classifieds or anything like that, the Property Guide. You now have to go on these sites to go and look at a property, and that’s normally where everybody’s journey starts.

But I think in the matter of ENSafrica, this home buyer is fortunate in that she’s going to get the money back. I know the matter is on appeal with ENS as well, but there are companies, specifically like Buyers Trust, where a home buyer has a way to pay their deposit over to the attorney through a far more secure platform. So make sure that when you sign an offer to purchase – and this is what we always say, Jimmy, people have a choice.

As a home buyer you don’t have to follow every single step that the estate agent is telling you to do. Ask what your choices are. Are there other options? Make sure that the companies being recommended to you in the sales process are legitimate companies.

Check out their website, check the ways in which they communicate, and check whether they are registered with the Financial Sector Conduct Authority. So make sure that you know what you’re doing, and also make sure that you have this transparency when it comes to your money, [that] you can see your money being paid over, you can see your money earning interest. That’s the kind of thing that you must be on the lookout for.

JIMMY MOYAHA: So absolutely, do your research, and do your research thoroughly. Don’t just jump into a deal because it looks like a good deal. Investigate what can go wrong. And for those individuals who are already the victims of these sorts of things – we know there are victims of identity theft, for example – the liability then becomes a serious concern.

Obviously we then want to know who helps a homeowner if they’ve been scammed. Are there avenues where individuals can go to find assistance if they feel that they’ve been scammed?

JACKIE SMITH: I’m going to recommend that they speak to a company like Buyers Trust before they get scammed. They can always contact us because I’d rather help them before they lose their money. But there are places like the Law Society’s Fidelity Fund that they can contact in case there’s an issue with an attorney and they feel that their money has gone missing.

And then, like you mentioned earlier, there is also the Estate Agency Affairs Board that they can contact, just to verify or notify them that potentially there have been fraudulent activities.

JIMMY MOYAHA: Before I let you go, Jackie, can you just give us golden rules? Sum it up. Maybe two golden rules in terms of how consumers can protect themselves from all of these scams.

JACKIE SMITH: Make sure that you are dealing with a legitimate company that has a safe and secure platform that they are communicating with you on. That’s number one.

Number two, don’t just pay your money over to anybody. Verify, be vigilant and double check, phone them. Make sure that the account numbers have been verified, and then only go and do your transaction.

JIMMY MOYAHA: So double check, triple check and then check some more. And when in doubt, just run.

Thank you very much, Jackie. That was Jackie Smith, talking to us about the property scams that are relevant and how you can protect yourself from those.

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